Best current accounts for cashback, interest and free spending abroad

Almost 1 million people switched their current account last year, as banks competed to offer the best perks, cashback and bonuses. 

There were 985,000 switches in 2022, representing a 20 per cent rise on the number recorded the previous year. 

That is according to the Current Account Switching Service – the organisation which has been making it easier for people to change banks since 2013. 

In total, more than 8.8 million people have now switched bank account since the service launched.

Almost 1million people switched their current account last year, according to the Current Account Switching Service

The service saw its highest ever number of switches in its near ten-year history in the final three months of 2022, with 376,107 occurring between October and December.

Jo Kenrick, chair of the Pay.UK Switching Services Customer Committee, said: ‘We were presented with a unique set of challenges, including a third successive year of economic turmoil, so it is particularly humbling to have reached our highest ever volume of quarterly switches in the final quarter of 2022.

‘We will continue to stand confidently by consumers as the UK’s switching service for current accounts as we enter our 10th anniversary year in 2023.’

For those still considering a switch, banks continue to offer cash bonuses of up to £200 as well as in-credit interest, cashback and other perks. We have rounded up some of the best incentives below.  

Best bank account switching offers right now 

Best for cash bonuses: 

A number of banks are offering free cash simply for switching. First Direct is paying £175, while NatWest and RBS are offering £200.

First Direct is offering switchers a £175 bonus when they deposit £1,000 within three months of opening the account.

NatWest and RBS are offering their highest-ever bank account switching incentive, with new and existing customers receiving £200 for doing so.

Anyone switching their main account to either NatWest’s or RBS’s Reward account or Select account will be eligible if they log into mobile banking and pay in at least £1,250.

Those going for the Reward account should know it comes with a £2 monthly fee. 

However, they will also be able to earn a monthly £4 cashback for setting up two direct debits a month and £1 a month if they log into mobile banking each month.

Best ever offer: New and existing customers switching their main current account to the NatWest will receive £200 within seven days of meeting the eligibility criteria

Best for interest:

Nationwide is offering an introductory credit interest rate on its FlexDirect current account of 5 per cent.

The special rate will be available for new applications on balances up to £1,500 for the first 12 months.

It means someone keeping at least £1,500 in the account could earn £75 in interest over the course of one year.

To benefit from the in-credit interest, holders must pay in a minimum of £1,000 each month.

Anyone hunting for higher interest would also be wise to sign up to a bank which gives access to a top-paying exclusive savings rate.

HSBC’s Online Bonus Saver is an instant-access deal that pays 3.25 per cent on balances up to £10,000, exclusive to HSBC banking customers. On any cash held over the £10,000 cap, the rate drops to 1.75 per cent.

The drawback is that the 3.25 per cent rate only applies for any month in which no withdrawals are made. During a month in which a withdrawal is made or the account is closed, savers will only earn 1.2 per cent for that specific month.

HSBC’s Online Bonus Saver is an instant-access deal that pays 3.25 per cent on balances up to £10,000, exclusive to HSBC banking customers

Barclays banking customers who sign up to its Blue Rewards scheme will be able to benefit from an exclusive easy-access savings deal paying more than 5 per cent interest.

The Barclays Rainy Day Saver account pays 5.12 per cent on balances up to £5,000. That could equate to more than £250 in interest after one year.

However, it’s worth pointing out that cash held above the £5,000 cap will only earn 0.5 per cent.

The drawback is that customers will need to pay £5 a month to become a Blue Rewards member. However, that can be nullified with its £5 monthly cashback for having two direct debits paid out of the bank account.

Switchers should also consider digital banks, which are offering some of the best easy-access savings rates at a time when many of the high street banks are paying sub-standard rates.

For example, Monzo is providing access to a linked instant-access savings account paying 3.2 per cent.

Read our review of the four best digital banks here. 

Best for free spending abroad

Many of the big banks charge a transaction fee when using their debit cards abroad.

For example, Lloyds and Barclays charge 2.99 per cent while NatWest and HSBC charge 2.75 per cent. They will also typically charge ATM withdrawal fees.

Digital banks, Chase, Monzo, Starling and Kroo all spare their customers from these sneaky fees. 

However, only Monzo and Starling are currently part of the switching service, so those wishing to take advantage of the other two will need to do so as secondary accounts. They are both fee-free accounts so this shouldn’t be an issue. 

Smartphone banking: Digital banks, Chase, Kroo, Starling and Monzo all spare their customers from sneaky fees when using their debit card overseas

All four banks’ currency converters use Mastercard’s exchange rate, and there are no additional transaction fees or mark-ups.

You can read more about the best debit cards for foreign exchange here. 

Best for cashback

Chase’s fee free current account is arguably offering the best cashback deal at present.

It is offering 1 per cent cashback on card spending for 12 months – capped at £15 a month.

This cashback offer extends for one year, as long as customers start depositing at least £500 a month into the account.

This means that for the first two years of having a Chase account it is possible to accrue £180 a year in cashback.  

Santander’s Edge account is also a good option, offering cashback on both debit card spending and direct debits, with up to £20 per month available, although there is a £3 monthly account charge.

Santander has unveiled Santander Edge, a new current account, which offers up to £240 cashback each year

There is 1 per cent cashback on essential grocery shopping and transport-based debit card spending. This is capped at £10 a month.

There is a further 1 per cent cashback on household bills paid via direct debit covering council tax, gas and electricity, mobile, landline, broadband and paid-for TV packages. Once again, this is capped at £10 a month.

To earn the £10 cashback in either category, customers will need to spend £1,000 a month in each category. This may be a tall order for some.

The £3 monthly charge is unavoidable so potential switchers also will have to factor this in.

To be eligible for the Santander Edge current account, customers need to have a minimum of £500 credited into their account every month and at least two active direct debits.

This post first appeared on Dailymail.co.uk